NEW YORK (TheStreet) -- The fact that investors love dividends so much has always fascinated me. After all, they create a double tax hit that sends more money to the government and wastes capital.Here's how: The dividend-paying company pays taxes on its earnings before giving the dividend to shareholders, who in turn pay taxes on the dividends. If the company had simply held the cash, capital would have been preserved (assuming that the company doesn't waste it) and less would have flowed to the government in the form of taxes paid by shareholders.
Dividend Growth Reveals the Path to Profits
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts
Every recommendation goes through 3 layers of intense scrutinyquantitative, fundamental and technical analysisto maximize profit potential and minimize risk.
Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.